From the Government to your Wallet: How Should You Spend Stimulus Money?
- Author: Michael Bordonada
- Posted: 2024-08-07
Depending on the success of government negotiations and the speed of the machinery of the federal government, it seems very possible that more federal stimulus money may be on the way. Details must be worked out and agreed to, but if this stimulus package looks like the last one, the average family of four could pocket up to $3400. Even a portion of that money could be huge for your wallet.
The purpose of this money is to stimulate the economy and get more Americans back to work, but it goes without saying that you should use this "found" money in the way that best suits your needs. So: How should you spend your stimulus check?
Pay the Bills
Unfortunately, millions of Americans have no choice with how they use their stimulus money: They simply must pay the bills. Millions fell into poverty since COVID-19 first appeared, and that number appears likely to extend. This is particularly important, given that there is no agreement, at the moment, to extend the federal eviction moratorium or unemployment benefits that have kept tens of millions afloat. Given that unemployment claims continue to grow, it appears that more and more Americans are financially struggling.
If you are late in any payments, such as your mortgage, rent, or utilities, these payments must take the first priority. It is only if the basic part of your finances have been addressed that you can begin to address additional needs.Â
Examine Delayed Projects
If you are fortunate enough to have addressed your immediate needs, you can start to look at items in your house or on major possessions that you haven't addressed. For example, if you suddenly find yourself with thousands of dollars, it may finally be time to get that muffler replaced or repair the windows on the first floor of your house.
Everyone has to delay important maintenance from time to time, and hopefully, you have enough financial slack that you are able to address your needs sooner, rather than later. Just remember: One way or the other, you do wind up paying for projects you put off. It's just a question of when, and how much. Thankfully, engaging in delayed maintenance projects can often save you money over the long term.
Get Yourself Something Nice
If your immediate needs have been taken care of, don't deny yourself the importance of buying something fun or nice. There is certainly no shortage of deals out there, particularly s we head into the holiday season. Check out what is on the market, and get something good for yourself. As a bonus, keep your money in the local community and do what you can to support small businesses like restaurants. Furthermore, many places have deals on gift cards, and this may be the perfect time to purchase one. This has multiple benefits: You get to support a small business while simultaneously saving money.Â
Pay Down Debt or Invest
This may be the perfect moment to look longer-term at your financial situation and proactively use the money to pay down debt or invest.
Everyone should have emergency savings of at least 3-6 months of money that can get them through a major emergency. If you don't have one, this is the perfect place to use that money. From there, examine your debt. Do you have a debt-repayment strategy that involves paying down your debt by paying to back as soon as possible? If your debt is at manageable levels, do you have a savings account or other investment vehicles that you can use in order to turn this check into even more money? Alternatively, what sort of retirement accounts do you have? Have you considered putting this money there? This is certainly an option, but the stimulus money may have different tax impacts than normal, and you can only use certain types of money for certain types of retirement accounts. Make sure you talk with a financial advisor before making any investments.
At the end of the day, how you a second stimulus check will be entirely up to you. However, there is no question that some expenditures are more important and necessary than others. Make sure you have a solid grasp of what your financial needs are, and make financial decisions based on what that best suits your long-term needs, not just what may feel good in the short term.
